Advice needed on retirement income strategies, report finds

More than 90% of Canadian human resource (HR) leaders are worried about their employees’ preparedness for retirement, according to Toronto-based Morneau Shepell’s 35th annual Trends in Human Resources survey.

Specifically, concern among HR leaders is rising because more and more Canadian employees are covered under defined-contribution retirement plans that don’t provide guaranteed payments after retirement, the survey reveals.

As a result, 58% of HR leaders are looking to provide better education on retirement planning, 27% are offering decumulation options for when employees retire and 23% are allowing retirees to buy insurance at reduced cost through online retiree marketing places or other options.

The survey also reports that employers in Canada are expecting salaries to increase by an average of 2.3% in 2018. This is a jump from the 2.2% increase that occurred in 2017. Predictions for 2018 include expected salary freezes while excluding promotional or special salary adjustments.

“Employers are relatively optimistic about the coming year,” says Michel Dubé, a principle in Morneau Shepell’s compensation consulting practice, in a statement. “Despite this optimism, employers are still cautious about salary increases, perhaps reflecting a concern that rising interest rates may dampen economic growth next year.”

The prediction for a 2.3% salary increase appears to compare favourably to the current 1% rate of inflation, Morneau Shepell adds. Salary increases in sectors such as finance and insurance are expected to remain strong at 2.7% next year.

The Trends in Human Resources survey was conducted in July with contributions from 370 organizations employing 894,000 Canadians from a variety of sectors.

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